When swarms of hundreds of deer decimated a Louisiana farmer’s 406-acre corn crop, the resulting lawsuit against his landlord became a landmark case for farm lease law — and served up some hard-learned lessons on word choice and divine intervention.
Washburn University School of Law professor Roger McEowen brought the intriguing case of K and M Enterprises vs. Pennington to the attention of participants at the Greenwood County Women in Agriculture meeting in Eureka, Kansas. The case highlights the need for specific, binding agricultural leases in farming’s often-unpredictable circumstances.
Whether the circumstances of the case sound like a miracle or a plague, the acting court’s ruling made it clear the farm’s losses were due to two inevitable environmental challenges — the elevated level of the Mississippi River and a critical lack of acorns that lead to an extreme influx of deer. While there was a written lease on the property in question, the plaintiff in the case underestimated the breadth of the risks he assumed when he entered into the contract.
“Of course in this case they did have a written lease in front of them and the courts examined the lease to decide that the tenant bears the risk,” McEowen said. “The contract language was clear and the court said it was unambiguous and referred to an ‘Act of God’ as among the risks assumed by the tenant.”
A sudden and unexpected manifestation of the forces of nature — or “Act of God” — is something farmers face every season, but for landlords and tenants alike there could be contractual risks associated with those events. McEowen used the case as an opportunity for landowners and lessees to look at their leases and ask themselves, “What if?”
“Even though they had the lease in writing, my point to you is that they did not anticipate a strange event like that,” McEowen said. “Sometimes it is difficult to anticipate everything, if not impossible.”
Tenant –Landowner Responsibility & Liability
Liability in the case of farm leases often correlates to the individual in possession of the land at the time an incident occurs — in most cases the tenant. Outlining the conditions of the tenant’s possession in a written lease can help landowners protect their interests in the land and maintain control over their own liability.
“The tenant has possession during the term of the tenancy and so the owner cannot use the land — technically can’t interfere with that right of possession and use the land for their own purpose unless they receive the tenant’s permission,” McEowen said. “The landowner can’t even hunt their own land unless they have a written lease wherein the landlord reserves the right to hunt the premises.”
McEowen includes a word of warning for tenants intent on barring landlords from hunting their own property during their lease period, saying although tenants have a legal right to bar their landlords from the property doing so can result in a very short-term tenancy. The same warning holds true for the elimination of noxious weeds — which without a written agreement is a shared responsibility between the tenant and the landlord.
“The statute says both the landlord and the tenant are responsible for controlling noxious weeds but if the weeds aren’t controlled and the county finds it the landowner will be billed,” McEowen said. “It really is both parties’ responsibility but this is another one of those things it’s best to address in a written lease.”
While tenants with livestock are responsible for the upkeep of the fences on leased land, they are not responsible for building new fences or paying for any other permanent improvements to the land. McEowen cautioned tenants against making improvements they could not physically take with them, as those improvements would then belong to the landlord.
“If it is a permanent improvement and is deemed to be fixed to the real estate then it is the landlord’s property,” McEowen said. “The question is whether the improvement can be removed without harming the real estate and if so it is not a permanent improvement and the tenant can take it.”
In the case of a farm or hunting accident, liability for the accident tracks with whichever party is in possession of the land at the time of the accident. While both parties should have liability insurance, McEowen said possession typically falls to the tenant.
“Possession and control also picks up liability and that would be the tenant in most instances,” McEowen said.
Tenants may not sublet or reassign their lease contracts without landlord consent — doing so could result in the forfeiture of any crops the secondary tenant planted during their brief takeover from the primary tenant.
“The tenant cannot assign the transfer of a lease without the landlord’s permission,” McEowen said. “That makes the lease voidable — which means the landlord can reenter, take possession and remove the new tenant, or whoever the lease was assigned to, by giving 10 days notice.”
Similarly, when a buyer takes ownership of a new property, they cannot immediately evict tenants already under a lease contract with the previous owner. If the tenant has already paid rent, they do not have to pay the new owners rent for the same time period covered under their original lease.
“The buyer of farm real estate that is subject to a lease takes that real estate subject to the lease,” McEowen said. “You don’t buy the property without falling subject to the existing lease because, again, we are separating ownership from possession.”
When a possessory right may have already been granted, that right does not get cut off when the land is sold, McEowen said. While oral agricultural leases are common, written agricultural leases allow both landowners and tenants to have a more concrete legal stance should any unforeseen circumstances arise. Whether warding off hundreds of hungry deer or other natural disasters, a written agreement is a good idea.
For more information on agricultural lease and tax law, visit http://washburnlaw.edu/practicalexperience/agriculturallaw/waltr/index.html.